TRADING UPDATE
CONTINUED GROWTH SUPPORTED BY ROBUST REGIONAL PORTFOLIO AND ACTIVE DEVELOPMENT PIPELINE
St. Modwen Properties PLC (LSE: SMP), the UK’s leading regeneration specialist, today announces its trading update covering the period from 1st December 2015 to 22nd March 2016, prior to its Annual General Meeting in Birmingham at 12.00 noon today.
The Company is pleased to announce that the business continues to perform well, supported by its extensive regional development portfolio and income producing assets. Real value continues to be added across our UK-wide portfolio through land renewal, planning gains and asset management.
In the period, we have already completed a number of key retail and industrial acquisitions and the portfolio has also benefitted from new opportunities secured through Development Agreements. Over the course of 2016, we will continue to seek to acquire new opportunities in this way, with good development potential in the long-term and further enhancing net rental income in the shorter-term. In doing so, we continue to build on our strong regional presence.
As we look to bolster the portfolio through the identification of attractive new investment opportunities, we are simultaneously seeking to dispose of certain assets to which we can no longer add material value. During the period we have already sold or agreed for sale £39m of mature assets at or above book value.
Demand for residential land from third party housebuilders is steady and we have agreed or completed £41m in site sales in the period, with prices at or above book value.
We continue to extract maximum value from our income producing portfolio and we are experiencing good occupier demand across the UK. Our actions taken since November 2014 have grown annualised current gross rent roll from £45m to £60m.
In addition, we have already identified further sites from our existing portfolio for Private Rented Sector (PRS) development which we will progress through the planning process this year. Construction works are expected to start shortly for the development of 201 PRS apartments on our 110 acre site at St. Andrew’s Park, Uxbridge for delivery in 2017/18.
Activity across our commercial development portfolio remains strong and we continue to recycle developments that were commenced speculatively.
Our housebuilding activities through St. Modwen Homes have stepped up a gear and overall the housebuilding area of the business remains very profitable, reflecting the strong consumer appetite for housing across the UK, with reservation rates and sales prices currently ahead of targets.
The procurement of the market at New Covent Garden Market (NCGM) is now underway, with vacant possession of the 10 acre Nine Elms Square site remaining on track for Spring 2017. As outlined in our 2015 full year results, we intend to explore our options to either sell, joint venture or develop this site during 2016.
We are aware of the negative sentiment expressed towards Central London, Zone 1 residential prices and Nine Elms in particular. Our share of NCGM, held in a 50% joint venture with VINCI Investments Ltd, accounts for 13% of our UK-wide portfolio. Having reviewed sales activity in the area it is clear that current market evidence does not support this level of negativity.
Bill Oliver, Chief Executive of St. Modwen, commented:
“We have experienced a good start to the year as our extensive regional portfolio and development activities continue to produce real opportunities for growth. We expect this to lead to continued value creation for our shareholders.”
